Stream wars

The battle for local TV audiences in an on-demand world.

The way we view our favourite content has changed considerably in the past few years, increasing the challenges facing marketers and advertisers in their quest to influence consumers. GRAHAM MEDCALF asks top TV execs what they’re doing to help marketers best reach increasingly segmented consumers in a way that’s convenient and not intrusive.

The way in which we watch TV is evolving, with New Zealanders increasingly choosing to engage with both broadcast video on demand (BVOD) and subscription video on demand (SVOD) platforms. TVNZ On Demand, Neon, Netflix, Amazon Prime, Spark Sport, Disney Plus, Apple TV+ – the digital options for TV viewing have expanded at a rate to satisfy the most discerning viewer, yet at the same time live TV viewing is holding steady, with 89 percent of all linear viewing remaining live for over three million New Zealanders who engage with TV every week.

We’re in a golden age of content. People are watching more TV shows than ever before, but how we’re watching has changed. Since Sky launched Neon in 2015, to coincide with the launch of Netflix in New Zealand, the landscape has changed radically. For marketers, the advertising options have proliferated, but choices often seem confused and haphazard as advertisers, like viewers, come to grips with the new age.

Local broadcasters have perhaps been helped by the realisation that New Zealand’s Netflix has one of the worst content libraries in the world. Simply put, this is because the local players already have New Zealand distribution rights to some of the best shows available. A recent Surfshark study demonstrated that although Netflix doesn’t have any trouble securing programming for New Zealand, the quality of the titles available leaves something to be desired. As Stuff wrote in June 2020: “Although New Zealand Netflix is 23rd out of more than 190 countries for the number of titles available, the total Metacritic critics’ score for all of our content combined places us ninth lowest in the world.”

The primary drawcard of Neon along with Sky TV is that they have exclusive distribution rights to HBO content, including many hit shows. TVNZ and Three have also succeeded in securing popular programming, supplemented with a raft of local programming that has great appeal with local audiences.

“Connected TVS are now the norm, and at TVNZ we’re seeing massive growth in video-on-demand viewership and also live streaming of traditional TV channels,” says TVNZ’S Commercial Director Jodi O’donnell. “International SVOD services are launching direct to consumer in competition with local players. Fibre, 5G and data affordability are bringing streaming to the masses and driving this change too.”

Consumers have plenty of choice, there’s no question about that, but it’s also a pretty confusing landscape. Sky makes it easy for customers by bringing a range of great content together in one place, whether via satellite or streaming with Neon, Sky Go and Sky Sport Now. Sky’s ambition is to connect customers with the sport and entertainment content they love in ways that work for them, whether that be through satellite or via streaming.

With quality broadband still an issue in some regions, the Sky Box and the functionality of Mysky with its satellite connection continues to provide reliable coverage to everyone in Aotearoa. Sky has managed to be the preferred content aggregator for Kiwis who’re comfortable to subscribe to the bundle of news, sport and entertainment of their choice, and are happy to coexist with others in the market, partnering where it makes sense to to ensure their customers have access to the content they want.

There are plans for a new Sky Box to be launched into the market in 2022 that will include the ability for various apps and SVOD services to be accessed via the Sky Box. Sky have been a great partner for global players and local partners like Spark and Vodafone. Their Sky Broadband team recently partnered with Disney+ on a compelling offer for new subscribers to New Zealand’s newest broadband provider. They’ve also partnered with TVNZ and Newstalkzb to bring the Olympic Games to Kiwis, and shared the State of Origin and Wimbledon with Discovery NZ.

‘Connected TVS are now the norm, and at TVNZ we’re seeing massive growth in video-on-demand viewership and also live streaming of traditional TV channels.’ Jodi O’donnell

‘A digital-first strategy gives us the opportunity to make content available to our audience outside of traditional prime-time viewing, allowing us to open up the show to a whole new family audience, who will still be a part of those daily watercooler moments.’ Glen Kyne

Globally, Discovery+ is a bestin-class direct-to-consumer (DTC) platform and Discovery’s General Manager New Zealand & Australia Glen Kyne says they have a subscriber base of 18 million people across their entire DTC portfolio.

“We’re planning to launch Discovery+ in Australia in the coming months, with New Zealand to follow,” he says. “In the meantime, we continue to invest in and grow Threenow and are increasingly leaning into a digital-first strategy. For the first time this year, we launched The Blocknz on Threenow before it aired on Three, ultimately changing the way that the show is consumed by audiences and the perception of Threenow.

“A digital-first strategy gives us the opportunity to make content available to our audience outside of traditional prime-time viewing, allowing us to open up the show to a whole new family audience who will still be a part of those daily watercooler moments.”

Discovery already used this approach with one of its most popular international shows, Marriedatfirstsightaustralia, and Glen says they “had a phenomenal response from viewers. This is the first time we’ve used a digital-first strategy with local content and the response from Block fans has been positive. As audiences shift to online, Discovery plans to make more content available on Threenow.”

Video is TVNZ’S core capability, and that won’t change. “We no longer consider TV and streaming services an either/or,” says Jodi. “Instead, we’re focused on delivering content however our audiences want to consume it. Ultimately, the future of TV is Ip-delivered – the exponential growth of simulcast viewing tells us this is true. We’re committed to moving towards this future while balancing it against what we do now.”

Unlike the likes of Neon and Netflix, TVNZ Ondemand is unique in that it’s a ‘free’ service – the platform offers a significant amount of local content alongside premium international programming in an ad-supported environment. “TVNZ Ondemand now reaches one million viewers a week, but we think we can grow this further,” Jodi continues. “Looking ahead, we intend to transition to a new IP platform. This will give us more options, from SVOD services to digital channels. However, we won’t walk away from the services we currently provide – we’ll simply add to them.”

Marketers and media planners will need to have a good understanding of different platforms and how content is viewed on each and every one of them. The 30-second creative will always have its place, but consideration will have to be given to a mix of formats and executions to generate cut-through and connection with audiences. When it comes to streaming, there are new products that can add value for brands too – from ‘ad on pause’ (a TVNZ Ondemand feature) to ‘digital ad insertion’, there are so many new ways to reach captivated viewers.

There is, however, still very much a place for ‘traditional’ advertising on TV, even with the ability for viewers to timeshift their viewing and avoid advertising if they wish. The pressure then comes on creative and media teams to really nail messaging and delivery that resonates with consumers and adds to a positive view of a brand across multiple platforms for multiple audiences.

Glen advises marketers to tailor their advertising to where the audiences are, and maintains that TV advertising remains the most effective medium for building a brand. “[It’s] the fastest to build reach, and has been proven over and over again to deliver the highest return on investment, all while offering a quality, brand-safe environment. This remains true regardless of whether the audience is consuming it via a satellite broadcast or IPTV.”

Australian research by Roy Morgan shows that SVOD and BVOD brands are perceived by users to hold different attributes. SVOD brands were more often associated with advertising-free, high-quality movies and original content, while BVOD brands were more often associated with value for money, convenience and high-quality TV shows.

Glen’s looking forward to sharing the company’s Discovery+ plans for New Zealand soon, including what that means for Threenow customers. “A service such as Threenow or Discovery+ extends the reach of our linear business, and enables marketers and media planners’ access to various audiences simultaneously across linear and digital, while offering additional benefits such as programmatic buying and targeting capabilities. Local production continues to present great advertising opportunities, and we’re seeing demand for this grow significantly, from sponsorship to brand integration within our own formats, right through to fully brand-funded formats such as 2ndchancecharlie, which we intend to do more of.”

With the proliferation of channels and platforms, it’ll be interesting to see what cooperation there will be between players. In a market of New Zealand’s size, for most studios the most profit-maximising route is distributing content through an aggregator such as Sky, whose ongoing

relationships with NBCU and ESPN are good examples of how many global platforms are comfortable and keen to continue to get their content to as many New Zealanders as possible. This depth and breadth of content relationships gives Sky some level of protection, and their position within this market as a content aggregator makes them an attractive partner.

Despite the successful launch of Spark Sport, Sky is still seen as New Zealand’s home of sport, with 12 sport channels dedicated to the action Kiwis love, including rugby, netball, cricket, rugby league, golf, motorsport, tennis and football, among so many others, including the Olympic and Commonwealth Games. Thirty years of sharing the best and most diverse range of sport with New Zealanders has been at the heart of the Sky promise. The breadth and depth of its sport content is nothing short of exceptional.

Sky has had to adapt and in this new era, seems to be completely comfortable with the concept of co-exclusivity. It used to be about exclusive or non-exclusive, and now they’re talking about coexclusive, where it makes sense for their customers and sometimes the bottom line. You’ll find both Sky and Spark offer the likes of the UFC and NBA, but each operator delivers differently, in terms of volume, variety or content. For example, Sky had the rights to the first ever World Test Championship live, while Spark, despite its agreement with New Zealand Cricket, could only offer highlights after the event.

While delivering the best content possible to its customers, Sky also committed to providing important content free to access. Examples are many and varied, including the finals of the Cricket World Cup and Netball World Cup, the ANZ Premiership Grand Final, and free access to Silver Ferns and Constellation Cup games, and Vodafone Warriors, Black Ferns and Kiwi Ferns matches. Sky also partnered with TVNZ and Newstalkzb to bring the Olympic Games to Kiwis all over Aotearoa, while sharing the State of Origin and Wimbledon with Discovery NZ.

TVNZ is also motivated to make live sport freely available to all New Zealanders. Its Rugby World Cup 2019 coverage reached 2.9 million Kiwis (AP5+), the America’s Cup reached 2.6 million (AP5+) ,and the Olympic Games Tokyo 2020 reached 2.9 million viewers on TVNZ 1, with 4.5 million live streams. In the spirit of collaboration, TVNZ continues to work with partners who share their vision of bringing live sport to New Zealanders, and that includes partnering with both Spark Sport and Sky.

“What we do complements what the global players are doing,” says Jodi. “We have a free service with a local content focus, and audiences are happy to use our platform alongside services like Netflix, Amazon or Apple+. Innovation in the technology space certainly impacts us, though. Viewers have an expectation of their digital viewing experience and if you don’t meet it, you won’t be part of their choice set. These global giants have huge resources at their disposal. We won’t outspend them, so we have to think differently and act nimbly.”

Linear TV is evolving, and customers continue to enjoy the ‘lean back’ element of having channels curated to their viewing needs. Sky’s channels continue to perform strongly, with entertainment channels brands such as MTV, E! and Vice having stronger appeal to audiences younger than 45. Children’s channels such as Nick and Cartoon Network also provide a safe viewing experience that’s resonating with younger families.

Parental controls are often more difficult to manage over the internet, and curated channels remain valuable for family households in New Zealand.

Satellite delivery is still essential for live sports viewing if New Zealanders want a reliable and seamless viewing experience. This has been emphasised through the introduction of sports streaming services in New Zealand, where linear TV has maintained significantly higher audience share.

Through their insights and research in the past 12 months, Sky has seen the power of an integrated linear and digital experience, giving viewers more control and choice over their TV viewing. This as the sweet spot for many New Zealanders who enjoy a linear experience when watching their favourite shows and channels, but who also want an improved digital and streaming experience.

Great content has a price and at some point, consumers will be asked to pay for it – whether that’s through subscription or through viewing advertising. There are other models, for example sponsored content or event specific costs, as with UFC through Sky Arena.

Even content freely available on Youtube comes parcelled with advertising or a subscription that allows viewers to avoid advertising.

As long as producers, broadcasters and streamers understand and present what viewers are looking for – quality and relevant content delivered in a reliable way at an affordable price – there will be a market for paid content. Viewers will watch what they want wherever they can find it, and advertisers will need to find those viewers, wherever they decide to go.

As Glen puts it, “It’s going to be an exciting time for consumers, with access to more content than ever before, across more platforms. In our local market we already have Neon, Netflix, Disney+ and others, and there’s no doubt we’ll see even more SVOD products launching in New Zealand as the streaming wars continue globally. It’ll be increasingly important for SVOD players to carve out their own lane with a clear offering to attract viewers, and to continue investing in local content to keep audiences engaged and coming back – all elements that we’re very clear on for when Discovery+ launches in New Zealand.”